The Additional Buyer’s Stamp Duty

With the stated aim of cooling demand and expanding housing supply, the Government announced on 11 January 2013 a revision of the earlierintroduced Additional Buyer’s Stamp Duty (ABSD). This revised ABSD applies to purchases of residential properties on or after 12 January 2013.

Residential properties are acquired not only as investments but also as a form of a cherished family asset. The ABSD measure also affects buyers acquiring a matrimonial home jointly with their spouse or another family member, as well as those who intend to make future provision for their offspring. These buyers are understandably looking to structure their purchases to reduce the impact of recent changes in the stamp duty regime and their tax liabilities. This article explores the important issues which should be considered by married couples and families seeking to jointly purchase residential properties and parents who intend to provide real estate assets to their children.

The 'property count' and ABSD tax rate

In the past, it was a relatively straightforward matter for spouses and family members to purchase residential property together. However, couples and families must now consider how their existing property ownership or interests in property, also called the 'residential property count', will affect their ABSD tax liability exposure in their next residential property purchases:-

Click here to view table.

Each co-purchaser's residential property count now affects their spouse or family members buying properties in joint names. The cost of purchasing a residential property together will be increased if a co-purchaser attracts ABSD, or a higher ABSD rate, due to his or her residential property count, which includes:-

  1. full interest in the property as the registered owner;
  2. partial interest in the property as the registered owner;
  3. beneficial ownership in the property under a declaration of a trust; and
  4. beneficial ownership in the property under a settlement (e.g. a will).

To reduce tax liability on a property to be purchased jointly, co-purchasers should carefully scrutinise each other’s residential property count as the ABSD rate imposed will be based on the buyer with the highest tax liability (subject to the co-purchasers qualifying for remission).

Where the spouse is a foreigner

If a couple with mixed nationalities wishes to jointly purchase property, ABSD is chargeable on the full price of the property, at the rate applicable to the spouse that attracts a higher ABSD rate. For example, if the couple comprises a Singaporean spouse purchasing his first property, and the other spouse is a foreigner, a 15% ABSD rate applies (assuming the foreign spouse is not a national of a country mentioned below). In such case, the Singaporean spouse will not get the benefit of the 0% ABSD for that property, unless an application for remission can be made and has been successful.

Where remission or a refund of ABSD is concerned, the Inland Revenue Authority of Singapore presently has the following general considerations:-

  1. ABSD remission may apply under certain circumstances, to a copurchase by a married couple involving at least one Singaporean spouse.
  2. Such couples may be eligible for ABSD refund on the purchase of their second property if they sell their existing/first property (whether co-owned or owned separately) within six months from the purchase of the second property (if it is a completed property) or TOP/CSC (whichever is earlier) of the second property (if it is an uncompleted property).

As regards foreign spouses, while the 15% ABSD tax rate generally applies, it is also necessary to note that his or her nationality may nonetheless qualify for some form of ABSD remission. The following foreign co-purchasers should note that the scope of the respective free trade agreements between their country and Singapore accords them the same treatment as Singapore citizens:-

  1. nationals and/or Permanent Residents of Iceland, Liechtenstein, Norway and Switzerland; and
  2. nationals of the United States of America.

Possible ABSD remission aside, it is clear from the measures that if the ‘ABSD affected spouse’ indirectly acquires an interest in the property via a trust as a beneficiary, with the registered owner as the Singaporean spouse, ABSD will still be imposed at the rate applicable to foreigners. Therefore, in the event the trust is established at the time of purchase (e.g. prior to exercise of the option in respect of the property), Buyer’s Stamp Duty (BSD) will be payable on the sale contract. ABSD will also be payable by virtue of the fact that the ‘ABSD affected spouse’ has an ultimate interest in the property as a beneficiary under a trust. If the trust is only established later, not only would the above apply, more BSD would also be payable upon the declaration of trust (i.e. there is a transfer of interest in the property to the beneficiary). In either case, it is also noteworthy that the beneficial interest under a trust will add to the beneficiary's residential property count.

So for couples who currently hold property in joint names, it may seem attractive to simply transfer one spouse’s part share to the other spouse. While the transferee spouse will have to pay BSD on that partial share transferred, and also ABSD if he or she has any ABSD liability due to his or her nationality and existing residential property count, this exercise will nonetheless free up the transferor spouse, in that, by virtue of this partial transfer, he or she now has one less (or no) residential property in his or her name.

There are of course limitations to this arrangement, as couples will have to look at their own ability to obtain financing. This includes the consideration as to whether Central Provident Fund monies utilised from one spouse’s account is sufficient to assist with the purchase and/or partly finance the instalments on the loan. Where family members already co-own properties, a similar consideration on transferring the share held by one or more family members to another party will also be similar to that of spouses. Thus, although it may be appealing for the couple to jointly own the matrimonial home, if each spouse 'owns' residential properties by buying properties solely, each spouse may save by paying no, or a lower rate of, ABSD. However, this short term solution for tax savings does create a certain shift in the family situation, and couples should bear in mind that the notion of ownership and the family home, and debt liabilities, will be re-balanced or even redefined.

Where parents provide for their children

Parents who desire to provide a property or some share in the family home to their children will have to also bear in mind issues related to the residential property count and ABSD implications.

Some parents currently hold property on trust for their child simply because the child was a minor at the time the parents saw a good opportunity to purchase property for the benefit of the child’s future. It is also quite common for parents who hold real estate assets to provide that their properties be divided equally to all their children upon their death. This arrangement may be preferred to a trust, as property transferred pursuant to a will does not attract

BSD, and therefore, ABSD (note however that if the property is not transferred in accordance with the will, full duty will be charged on the excess entitlement acquired by the beneficiary).

In both these scenarios, whether the child is a beneficiary under the will or a trust, it should be noted that notwithstanding the child's indirect interest as beneficiary, at the relevant time, the property in question would arguably go to the child’s residential property count and affect his own ABSD liability in future. If the child is Singaporean, it would be taken that this child already owns one existing property (this is even though the interest in the existing property may only be a part-share), so that ABSD will be payable on the child’s first purchase in his personal capacity.


Current legislation creates several cost obstacles for parties seeking to purchase residential property together. One group of buyers that may be very much affected are married couples and families seeking to jointly purchase property. The reality is that for as long as such rules are in place, the practical approach by couples and families may prevail, in that, they may try to see how they can navigate the rules and hold their real estate with whatever tax savings; and to be less sentimental about what a matrimonial home and family home represents.